Investor Roadshow Presentation 2016 Financial Results

Transcription

1 By considering it all, PSG sees the bigger picture, which gives you the advantage Investor Roadshow Presentation 2016 Financial Results For the year ended 29 February April 2016

2 Contents 1. Group overview 2. FY 2016 results 3. FY 2016 divisional performance focus 5. Investor returns 2

3 01 Group overview 3

4 PSG Structure PSG Group 61.8% Other 38.2% PSG Wealth* 100% PSG Asset Management 100% PSG Insure** 100% Distribution Support division 4 * Includes PSG Employee Benefits ** Includes Western National Insurance As at 29 February 2016 Copyright PSG

5 A great company Wealthy clients serviced where they reside 206 Adviser offices 711 Advisers 193 offices 618 advisers clients Source: PSG Distribution 5 No. of advisers FY 2014 FY 2015 FY 2016 PSG Wealth PSG Insure Total

6 Business characteristics Equity market dependent Administration businesses people / systems dependent Not very balance sheet intensive Free cash flow generative Vulnerable to regulatory change 6

7 02 FY 2016 Results 7

8 FY 2016 financial results overview Recurring HEPS grew by 19% for FY2016 Consolidated results FY 2014 Rm %Δ FY 2015 Rm %Δ FY 2016 Rm Revenue * % % PBT % % 632 Headline earnings % 339 (14%) Recurring headline earnings % % Non-recurring headline earnings (7) (71%) (2) - (117) Weighted ave. number of shares (millions) 1,221 3% 1,261 1% 1,274 HEPS (Rand cents) % 26.9 (15%) 22.9 Recurring HEPS (Rand cents) % % 32.1 Assets under management (Rand billion) 99 34% % 154 Assets under administration (Rand billion) % 309 6% 327 Premiums (Rand billion) ** % % 2.5 * Total income per IFRS includes consolidated fund and policyholder related income ** Excludes Short-term administration platform gross written premium to avoid duplication Note: figures rounded to nearest Rmillion 8 Source : PSG Finance

9 Core business results Financial results analysis IFRS vs Core IFRS results (Core & Linked) FY 2014 Rm % FY 2015 Rm % FY 2016 Rm Total income % % Total expense (2 041) 16% (2 371) 17% (2 781) Profit before tax % % 632 Linked Investment business and other Income 208 (25%) 157 (1%) 155 Expense (83) (35%) (54) 56% (84) Linked profit before tax 23 17% 27 (19%) 22 9 Core business Income % % Expense (1 958) 18% (2 317) 16% (2 697) Core profit before tax % % 610 Core profit before tax (Excluding Intangible amortisation cost) % % 642

10 Headline earnings by division Total recurring headline earnings growth of 20% year on year Headline earnings* * All overhead costs are fully allocated Note: figures rounded to nearest Rmillion 10 Source : PSG Finance FY 2014 Rm % FY 2015 Rm % FY 2016 Rm Wealth % 227 (26%) 169 Asset Management 54 51% 82 1% 83 Insure 28 7% 30 33% 40 Total % 339 (14%) 292 * Includes amortisation of intangibles of FY 2016: R32m (FY 2015: R29m; FY 2014: R20m) Recurring headline earnings* FY 2014 Rm % FY 2015 Rm % FY 2016 Rm Wealth % % 286 Asset Management 54 51% 82 1% 83 Insure 35 (11%) 31 29% 40 Total % % 409

11 Financial trend We always look at our historical rolling track record FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 CAGR % FY 2015 FY 2016 YoY Gwth % AUA (Rbn) % % Premiums (Rbn) ** Revenues (Rm) Recurring headline earnings (Rm) Shares in issue (m) Recurring HEPS (cents) * % % ,018 1,604 1,846 2,557 3,015 3, % 3,015 3, % % % ,072 1,210 1,221 1,261 1, % 1,261 1, % % % Total advisers % % 11 * Includes Western National Premiums from Nov 2012 ** Excludes Short-term administration platform gross written premium to avoid duplication Source : PSG Finance

12 03 FY 2016 divisional performance 12

13 Wealth plans Growing and protecting client wealth Wealth assets split (Rm) Feb-15 Market movement Net flows Feb-16 % Excellence in products & services Third party funds * % PSG Multi Managed ** % Discretionary % Top advisers Total managed assets % Non discretionary % Superb platform Third party administration % Total wealth assets % Source: PSG Wealth 13 * Includes PSG advisers single managed funds of R4.8bn for Feb 2015 and R5.4bn for Feb 2016 ** Includes PSG single managed funds of R5.0bn for Feb 2015 and R5.6bn for Feb 2016 Growing and protecting client wealth driving new flows resulting in clients entrusting new investments with us

14 Wealth - excellence in products and services Sound new business flows Independent process with advisers oversight (both funds and securities) Review all counterparties Net Flows (Rm) Year-on-year Wealth managed asset net flows % -13% 39% -23% -10% 19% ALSI Negotiation with product providers H H H H H H Source: PSG Wealth, Bloomberg PSG Multi Managed Discretionary 3rd Party Funds ALSI 14

15 Wealth - top advisers Quality advisers delivering quality advice Wealth advisers (Incl. EB) FY 2014 * FY 2015 * FY 2016 Balance Opening Net new acquisitions Balance Closing Growth 6% 7% 11% * Restated to exclude advisers moved from Wealth to Insure during FY2016 Up scale existing offices via new hires Greater penetration selected area Growth in number of advisers & average book size Financial advisers new home at PSG unlocking and creating value for clients and themselves Well positioned to support advisers: Open architecture, stable systems, risk & regulatory compliance allowing advisers to focus on client interaction Source: PSG Wealth 15

16 Asset management plans Net new money at acceptable margin Focused marketing AM assets split (Rbn) Feb-15 Market movement Net flows Feb-16 % PSG Single manager ** % Investment performance PSG Money market and related assets *** % PSG Segregated Portfolios **** % Total assets under management % PSG Wealth administered assets * % Superb platform PSG White Label % Total AM assets % Source: PSG Asset Management 16 * Excluded from total PSG assets under administration to eliminate duplication ** Includes PSG Advisers single managed funds of R3.8bn for Feb 2015 and R4.2bn for Feb 2016 *** Includes PSG Advisers single managed funds of R1.0bn for Feb 2015 and R1.1bn for Feb 2016 **** Majority of this outflow relates to an execution only institutional client

17 Asset management - focused marketing Brick by Brick strategy Net Flows (Rm) Year-on-year single managed net flows % 128% 137% -93% 591% -40% ALSI Our approach Long-term assets (retail emphasis) Getting adequate margins Protect our capacity H H H H H H Source: PSG Asset Management, Bloomberg 17 Single Managed PSG Money Market Segregated Institutional Portfolio* ALSI * Includes private clients and segregated money market portfolios

18 Asset management Improving short and long term performance Single manager funds Performance 1-month rank 3-months rank 6-months rank 1-year rank 3-year rank 5-year rank 10-year rank PSG Flexible Rank Return 4.7% 0.9% 1.7% 2.9% 14.8% 14.1% 14.9% PSG Equity A Rank Return 6.7% -2.1% -5.8% -10.4% 11.9% 13.5% 11.7% PSG Balanced A Rank Return 3.9% -0.1% 1.2% 1.9% 12.1% 12.5% 10.9% PSG Stable Rank Return 1.9% 0.7% 2.7% 2.7% 2.7% N1 N1 Source : MorningStar February 2016 report 18 N1 The Stable fund does not have a 5/10-year history 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile

19 Gross written premium Insure Grow gross written premium income PSG Insure gross written premium (Rm) * Top advisers Excellence in underwriting Superb platform ST Distribution ST Admin Western Source : PSG Insure Western acquisition Nov 12 * Includes Short-term administration platform gross written premium Page 19

20 Insure - top advisers We continue to add top advisers to our Insure Distribution business Insure advisers FY 2014 * FY 2015 * FY 2016 Balance Opening Net new acquisitions (17) 13 6 Balance Closing Growth (7%) 6% 3% * Restated to exclude advisers moved from Wealth to Insure during FY2016 Greater penetration selected area Growth in number of advisers & average book size Financial advisers new home at PSG unlocking and creating value for clients and themselves Well positioned to support advisers: Open architecture, stable systems, risk & regulatory compliance allowing advisers to focus on client interaction Source: PSG Wealth 20

21 Net insurance result Underwriting margin Western National Insurance Insurance results % -12% 37% -28% 69% -5% Key differentiators % Personalised service to brokers Focus on commercial business Excellence in underwriting Healthy insurance float level > R500m Limited insurance and investment risk retention levels % % % % % % % 5.0% 0.0% -5.0% -10.0% 0.0 H1'14 H2'14 H1'15 H2'15 H1'16 H2' % Source : PSG Insure 21 Underwriting Results (Rm) Float Income (Rm) Underwriting Margin (%)

22 Reducing risk Recurring revenues Margin enhancing Risk vs return FY14 FY15 FY16 Perf fees/he * 11.4% 7.7% 3.8% Recurring HEPS 20.6c 27.0c 32.1c * - Based on recurring headline earnings Including PSG Life tax settlement: * ROE: 18.4% ** 22ROE (excl. perf. Fees): 17.6% FY14 FY15 FY16 Op margin 13.2% 14.9% 15.2% Op margin 12.1% 14.0% 14.7% (excl perf fees) C:I % 63.8% 60.6% 59.0% FY14 FY15 FY16 ROE 24.8% 26.4% 24.8%* ROE 22.0% 24.3% 24.0%** (excl. perf fees) Debt:Equity 9.4% 0.9% 0.7% Source : PSG Finance function

23 Focus 23

24 Key achievements Significant progress on top priorities Profitable strategic acquisitions (Western, Mauritius Adviser Office, IFR Equity Research) Growth in number and profitability of PSG Advisers (organic and acquisitions growth) Disposed of non-core operations (South Easter Hedge Fund, PSG Academy, Nhluvuko Risk Admin and others) Marketing Improvements (incl. TV campaign) Single sign-on client portal developed PSG Wealth Platform re-organisation Daily dashboards monitoring key financial and operational metrics 24

25 Top line revenue (R m) Top line focus Core operations (excl. IFRS consolidated fund and policyholder related income) FY 2014 FY 2015 FY 2016 PSG Wealth PSG AM PSG Insure Total core revenue per division (excluding inter-segment income) 25

26 05 Investor returns 26

27 PSG Konsult s TRI PSG Konsult performed better than JSE ALSI during tough times (in USD terms) Date Investment of R in PSG Konsult shares on 11 April 2005, and reinvesting all dividends received (net of DWT) and other distributions over period vs R invested on JSE ALSI Number of PSG Konsult shares PSG Konsult investment (R) PSG Konsult investment (USD) Annual growth in investment (R) Annual growth in investment (USD) JSE ALSI Total Return Index JSE ALSI Investment (R) JSE ALSI Investment (USD) Annual growth in investment (R) Annual growth in investment (USD) % 184% % 45% % 46% % 18% % 2% % 16% (19%) (38%) (38%) (52%) % 53% % 90% % 31% % 38% % 24% % 2% % 29% % 1% % 49% % 1% % 36% % 8% (3%) (31%) (4%) (32%) CAGR 37.0% 25.3% 16.1% 6.2% Source: Finance Team 27

28 Trading statistics Creating shareholder value Statistic FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 No. of shares in issue (millions) No. of shares traded (millions) % of shares traded 0.2% 0.9% 1.3% 1.4% 1.8% 2.6% 4.9% 8.9% Market capitalisation (Rm) Value of shares traded (Rm) % of market cap traded 0.3% 0.8% 1.1% 1.1% 1.4% 2.1% 4.7% 10.2% Source: Finance Team 28

29 Conclusion Business features underpinning our expectations for future success Largest independent adviser network in South Africa, with a broad geographic footprint that continues to expand Strong governance structures Strong brand supported by various industry recognition awards Highly cash-generative business with a sound financial position Clear growth opportunities for our businesses History of superior shareholder returns Focus on optimising risk adjusted return per share (Restrict issuance of new shares) 29

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